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Is Kodak employee's lawsuit a way of lashing out over bankruptcy?

In an apparent demonstration of anger over Eastman Kodak Co.'s recent bankruptcy filing, an employee has sued the company, claiming executives mishandled Kodak employees'401(k) plans by not ordering the divestment of the company's own plummeting stock.

Kodak, which recently filed for Chapter 11 , has said there is no merit to the suit. A legal observer noted that oftentimes, when a company files for bankruptcy, there is anger and resentment among the rank-and-file and those hard feelings sometimes manifest themselves as lawsuits against the people who get blamed for the company's misfortunes. That is a side effect to filing bankruptcy of which Chicago business owners might want to be aware.

Over the past few years, Kodak's stock price has dropped precipitously in value, especially recently. About ten years ago, it was going for $10 a share. As of Monday, it was selling for 35 cents a share. Evidently, Kodak managed its employees' 401(k) plans so that they were. heavily invested in its own stock. The plaintiff is claiming the company should have divested of its own stock and, because it didn't, the 401(k) plans lost tens of millions of dollars.

We mention this story not to give Chicago business owners who are thinking about filing for bankruptcy pause about what they are about to do. Rather, we mention it so that you can be aware that it sometimes happens. If you are concerned about something similar happening to your business, you might want to raise that concern with your attorney. He or she can probably offer advice as how to react if this possibility ever becomes a reality.

Source: The Rochester Democrat and Chronicle, "Lawsuit takes aim at Kodak," Matthew Dineman, Jan. 31, 2012

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